2010

Tradetime Products Thomas Yeomans

THE FOREXGRAIL Outlining an easy to use trading system that can be used with the AccuStrength for ForexSnap currency strength chart.

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Table of contents:

Personal Note pg. 3- 6 Thomas Yeomans

Chapter 1 pg. 7-11 The ForexGrail Trading System

Chapter 2 pg. 12- 17 Introduction to the AccuStrength

General pg. 18-19 General on the methodology

Chapter 3 pg. 20-24 Three parts to the trading decision

Chapter 4 pg. 25 Don’t play with scared money

Chapter 5 pg. 26-29 The heart of the system is you

Chapter 6 pg. 30-42 Basics First

Chapter 7 pg. 43-47 Anchors

FAQ pg. 48-49 Frequently Asked Questions

Terms pg. 50-51

Tradetime products and AccuStrength All rights reserved. You must have permission from the author to reproduce in whole or part. Copyright 2010 3157313ns ltd.

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A Personal Note

I began using the ForexGrail trading method several years ago while teaching

new traders how trends work, and found that it was everything I needed when used in combination with a currency meter. It was simple enough for just about anyone to understand, yet powerful enough to make serious income. I know there is no such thing as the grail but the people I taught first coined the word and it stuck.

Over the years, there have been some incredible changes to my original

spreadsheet, but the essence of the ForexGrail 2 SMA system stayed true. A 50 SMA crossing with price will tell you the trend and show an entry for the pair you are observing. The 5 or 7 will show you when to get out. Sometimes the drawdown at 7 is too much for highly leveraged traders and they don’t like to give up too much profit in the hopes it will turn around. A 5 SMA is good for those who like to get in and out quickly. (Remember, you must have confirmation from the currency strength chart and make sure its not getting close to a bounce or cross area.

You can start out using the ForexGrail with just about any currency strength

program but make sure it isn’t a “relative strength program”. These do not show individual currency strength and they’re on all the platforms for free. Also, don’t get an MT4 meter these days. They are about to be shut down in favor of MT5 plus there are not enough currency pairs on those free feeds to take a strength measurement correctly.

Use this simple trading system alongside the currency meter. Become familiar with its peculiarities. Practice before committing money. The 50/7 is a technical trend indicator. The 50/5 works just as well in smaller time periods with higher leverages.

The ForexGrail can be used on all platforms and charting packages. There are two time frames possible. The 4 hour and the 5 minute chart. They

both use the 50 SMA crossing price lines for entry, but you can choose between a 5 or7 SMA for exits on either time chart. You must use a price line and not a bar or candle.

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The system uses the SMA crossing with the Price line as its signal points. It is too hard to do using bars or candles. The four hour timeframe trader should be using less than 20 to 1 leverage.

Many clients ask me why I don’t make a program to auto trade the ForexGrail

system. Simply put: They don’t work. In six years I have never seen an exception. A marvelous program that lets you sit by the pool auto trading does not exist. I have never seen a single one that worked for more than a short time. They all end up ruining some poor buggers dream. (And the marketer runs off into the sunset.) Use your common sense!

The secret to trading professionally is not relying on some magic gizmo to think

for you. If profits and success were as easy as purchasing something over the internet, our financial system would collapse. Get serious. You are going to be trading up against some of the smartest and most ruthless traders in the world. Your broker hires the best talent money can buy. These guys and gals are paid a humongous amount of money to take you out. They already have a track record of destroying 98% of all new accounts.

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Leverage When your broker buys money from their banks, they don’t get leverage. In the

big leagues, there is an electronic credit check placed before they can even make a transaction. However, they offer the people on their intranets five hundred to one. Why do you think they do that? Winning $1,000.00 in the blink of an eye also goes the other way.

The vast majority of people I have taught to trade currency strength instead of price are still around. That’s quite an accomplishment since the average trader last about 90 days according to sources in the business. The odds are that you have already felt the wrath of reality that comes from opening a real trading account and finding yourself on the losing end of trades many more times than not. Don’t despair.

This book will outline a simple to learn system that will put you on the winning

end of trades almost instantly when it is used with the knowledge of individual currency strengths. You absolutely must follow the signals exactly as they are explained but more importantly, you have to use common sense. Keep your eyes on the news and events that may affect the trade you are in or the trade you are considering. I have a great personal forex bookmarks page with many of the top sites I keep track of. The link is here: http://tradetime.ca/bookmarks.html

I cannot think for you. I must assume that you have enough common sense not

to follow anything blindly. Learn as much as you can about economics and read constantly to keep up with what the professionals are talking about. This is a profession where research and constant education is required. Make it a habit to keep abreast of developing news events. You should subscribe to a decent news service or use the news that is provided on your broker platform. These low cost and free types of news sources are delayed but it isn’t a big deal unless you have a trade on during an important news release.

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My advice, as the original news trader, is to stay out unless it’s a minor report. The broker knows what you are doing. It was different in the old days when they hadn’t caught on to news trading.

As many of the destroyed traders out there will tell you: “BROKERS ARE NOT

STUPID!” Wait out the craziness prior, during, and after a big economic report. You are on your own but not alone. Thousands of people have been misled into thinking they can buy the holy grail of easy living through the internet. There is no magic. Anyone cannot do it. Products that predict the markets are nothing more than crystal balls.

You don’t hear much from losers because people whose lives have been

destroyed give up posting and participating. After losing it all, there is nothing but disgust for the entire profession. They certainly don’t feel they owe anyone anything and they know they’ll get flamed and ridiculed if they say anything negative.

As a programmer I have an appreciation of what is possible to do with the data and platforms back end suppliers give to their broker who in turn gives to me. Are they doing it things we don’t know about? I don’t know. No one knows. That’s privileged and proprietary information that is simply not available to anyone. We are on our own to make intelligent choices. If I could implore the beginners to do anything, it would be to start out with decent system that will let you follow the trends.

Next, build a knowledge base on how currencies move and why. Study their

individual behavior. Learn how commodities, events, and weather can shape an individual’s direction. Also, keep your leverage low at first. Use a broker that will allow you to flex your trade and lot size. Make tiny trades at low leverages and work your way up.

I wish you the best life has to offer. Tom Yeomans - September 2010

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Chapter 1

The ForexGrail Trading System

When trading Forex, your objective is to purchase a currency that will be going up in price and pay for it with one that is expected to go down in price.

You are routinely given a price chart to track the progress of your selected trade

pair. When you trade the EURUSD pair, the chart shows you how one is doing against another. It doesn’t give you the full picture. Each currency contained in your chosen pair interacts with seven other major world currencies.

A currency strength chart is a tool that will show you the results of these

interactions.

“A currency strength chart tells you what currencies to use while a trading

system tells you when.” A currency strength chart, allows a trader to see individual currencies. It tracks

the “behavior” of one currency among dozens of selections. The math behind this concept is simple enough. Day traders have been measuring strength for decades. Using a software program to measure and record the interactions of dozens of pairs is the only way to go when using intraday time periods.

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Integrating bounces and crosses on the currency strength chart to your trading system.

For the purpose of this discussion, bounces and crosses shown on the currency strength chart will occur several times a day on all currencies and just about all pairs. The knowledge of a threshold being crossed should be considered a time of caution. No matter what you system is telling you, these areas should be approached with caution.

A bounce occurs when a currency hits a certain number on the strength chart. If

it has shown a tendency to keep coming back to this number in the past as measured in a support and resistance like way, chances are high that it will bounce off that number and go in the other direction.

Just knowing that a particular area is coming up is not a system by itself but an important part of your decision making. It says “Be careful around here.”

Crosses.

Should you get a signal to buy on your trading system, and the strength of either

currency in the pair you are about to trade is going to hit a bounce or coming into a cross area, just put the trade off until you see what occurs after. These point out caution areas and ignore them at your own risk.

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Basics: All currency strengths oscillate. They move up through a center point on the

graph and then down again. Currencies observed on their own follow a sine wave pattern. They do it constantly.

Strength follows a regular rhythm and can keep this pattern for hours and days

through all time frames. This is great for trend system traders. Get used to thinking in terms of an individual currency. This sine pattern does not apply to pair charts where one currency is measured against another. This only applies to currency strength charts.

If an individual currency goes weak, it will go strong again. This is not like a price chart where the price may never return to the same place again. A currency strength chart is marked from zero to ten. When the strength goes down on a currency strength chart, it will always come back up. The price is irrelevant. It’s the rates of price change among them all.

Currency strength will always follow the sine wave pattern because of the way it

is valued against another currency. Since all currencies on the strength chart follow a rhythm, you can easily predict the highs and lows.

For Example:

If the US dollar strength has been moving up and down within a tight 3 point range, then you can safely expect a bounce back down to the lower value at the high and low end of the 3 point spread. I call these areas “Bounces” The strength of that individual has not gone higher or lower for a while and each prior time it bounced the other way. Sometimes the strength will go through the bounce area but more often than not it will bounce.

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Look at each currency on their own before considering any trades. Spend time examining each currency strength profile.

Choose a currency moving upwards and one moving down.

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Take a look backwards on the individuals chart. I apply a support and resistance like marking line on areas that hold a good chance of bouncing. Begin at a high time frame and work your way down noting the place you put the bounce lines. With a little practice and using the neat sticky line creator on AccuStrength, you can keep the lines throughout a wide variety of configurations and comparisons. Crosses. Crosses are areas you need to be aware of and prepare for. Just like a bounce area, the cross between two or more currencies is an area that one of two things occurs at. It bounces, or runs right through with vigor and you could get caught in a trap or an opportunity.

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Chapter 2 Introduction to the ForexGrail trading system using the AccuStrength Currency Strength Meter.

The AccuStrength currency strength meter is a new way of seeing what the

major 8 currencies are doing. The image above shows the AccuStrength 4 currency strength chart with the Euro and the US dollar strengths being compared to a pair chart of the EURUSD.

When things are boiled down to essentials, as currency traders, our mission is to

make money trading the difference in strength between 2 currencies contrived as a pair. The Currency strength chart will show you which currencies are trending over time. The AccuStrength will let you adjust the timeline and display the individual currencies one at a time or in combination.

Click in the box for the currency you want to see. You can choose all at once, singularly or certain combinations. Click again to deactivate it.

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Setting time periods. The AccuStrength central computers scan all 200 instruments available to it every five seconds. The strength algorithm is applied and the result is sent to your chart instantly. The selections refer to how much time can be observed in the window without scrolling.

You can change time periods quickly by right clicking on the chart or use the settings tab for specific minutes.

I prefer to use the ten hour time period as a starter and move the time down

once a trading opportunity presents itself. I like to observe long term trends using up to 2 days. You can right click on the chart or go to the settings tab.

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The AccuStrength lets you can scroll back hours or days using the little button in the bottom right hand side of the interface. Once you click on it, you can then use your mouse wheel to go back and forward through the prior days.

Time is always shown in your system selection for windows. On the bottom of the chart you will see a series of minutes displayed. Line Creation

The AccuStrength has user defined lines that are similar to a pair chart. You can mark trend and levels using a wide variety of line types and colors.

Another great feature is grid lines to mark out areas clearly. You can adjust their color and thickness.

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Along the top of the AccuStrength chart is a bar with the exact time, date and currency value for all the lines represented on the chart at that moment. There is a little ball you move with your mouse cursor that tells you exactly what time and strength each of the currencies shown were at that moment and it is displayed on the bar.

Currency box and line colors match.

The little box above is called a tick meter. It displays currency strength numbers six decimal places beyond the whole number. The formula we use for determining currency strengths is capable of a high degree of precision. The tick box is for information only. It changes much too often to be of any use. The chart is needed to see currency strength trends correctly.

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Logging in is easy. Once you have logged in for the first run, it takes time to collect all the back data. The second time you login, you only have to receive the data you missed since it was last turned on. That can take a few minutes. If you get a login message that refuses you, check the upper and lowercase characters carefully and retry. If it comes back too quickly, turn the program off and re-launch. Then try again. Sometime copying and pasting the passes work better. The next time you login, your passes are kept in memory. If you save your changes before exiting, everything can be the same as you left it.

Save your favorite settings under a “theme name”. Pick anything you like and it can be brought back at any time. Always make sure to press “Apply” button after making changes.

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Your alarms can also be set using this tab. Select whatever parameters you like the program to signal you at. When that level or threshold is reached, it will ding a system sound or you can have it play a customized sound. There is also a proximity alarm to tell you when two or more currencies are coming together. Set the number proximity to the distance you want to be notified.

As you can see, the AccuStrength has all the controls on two tabs for lines colors and chart background. Easy and intuitive.

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You can set the thickness of each line using the little number selectors to the right of the currency color box. You can get more information on features and upgrades by clicking the “system notices” button at the bottom left hand side of the chart interface.

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Currency strength is everything when trading foreign exchange.

The value of a currency has to be looked at in comparison to how it has been performing against other world currencies. As foreign exchange traders, we usually watch a chart showing the difference in value of two. The difference in price between the two currencies is a spread. Only Forex uses spread charts. They are not the same as a stock or commodities chart. That’s why technical analysis doesn’t work very well in Forex. Most of it was designed for other day trading markets. In order to trade the Forex market correctly, determining the strength of an individual on its own is vital. If you think in terms of strength and weakness, and apply it to an individual currency, you are thinking like a bank trader. When foreign exchange trading opened the door for the retail investor less than ten years ago, people began jumping into the high leveraged community automatically assuming that technical analysis would convert as well. On the surface you would think so. Traders from other markets look at one instrument fixed to the US dollar. Forex charts look at two completely different entities. All through the trading day currencies are changing in value as perception, news, politics, and economics play out in their respective countries. One currency may be going up in value due to a piece of great economic news, while another is losing its value from a political scandal. The interplay between two currencies is what we are seeing when looking at a forex price chart. Standard Forex charts track the changes made by two individual currencies. For example: A EURUSD chart shows the value of the US dollar against the Euro. If the line goes up, is the euro really gaining strength or is it reflecting weakness of the US dollar? We don’t know until we can see several other pair charts containing the EURO and the US dollar and note their weakness or strength in that pair combination.

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The value of different currencies is always changing. One interesting concept

that is known by all market traders is that each currency will go through a period of trending, drifting, and then trending. Being able to electronically measure and weigh each currency as it interacts with others is the secret to trading forex. It’s the edge you were looking for. We measure the rate of change taking place among all the pairs. Each currency is dissected and analyzed while its performance is measured among them all.

The use of two moving averages without the currency strength chart, is an average trading method at best. You observe the strength trends and use them to insure that they are following price action. This confirmation of individual currency strength turns an otherwise normal system of entries and exits into a profitable system. It gives us an edge to make it a great system.

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Chapter 3

Your trading decision should have 3 parts to it.

1. Pick a pair of currencies that are moving toward strength or weakness using the

currency strength chart. Make it a habit to look at each currency on its own and make notes about each individual before you jump into a trade. You want to find a currency on its way up and match it with a currency on its way down. (Don’t pick the strongest and weakest since they may have most likely already exhausted themselves.)

2. The 50 SMA in any time frame is a good reference point. There is no need for fancy ways of measuring the moving average of price. Exponential and Weighted bah blah really means nothing more than a Simple Moving Average based on the close price. SMA’s are a simple way to show you when price is crossing a threshold. Create a 50 period simple moving average on your broker chart and change your candles or bars to a line. This is your potential entry spot. You will be looking for the 50 sma crossing with the price line. This must be combined with the correct selection of strong and weak currencies according to the strength chart.

3. Find an entry using a regular Forex pair chart using one that contains the two currencies you have selected as strong and weak candidates. (If you see that the Euro dollar has been climbing on the strength chart and the economic news is pretty good, then you match it with a weak and weakening currency). Once the 50 crosses price, wait for another six pips to make sure it isn’t just grabbing a few orders and coming back. Whatever you feel comfortable with is fine. The market may be slow or fast so adjustments have to be made.

4. Your exit is when the 7 or 5 SMA (simple moving average) crosses the price

line. The faster moving averages allow you to see when the micro trend is over.

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Our job, as day traders is to predict the direction of currencies for a few minutes to an hour. Not days or weeks. Our trading decisions should only be based on what is most likely to happen for the amount of time are involved in the trade. Your objective is to win more trades than you lose. This system, with a fairly bright person using it is capable of very high win ratios. Don’t let the simplicity fool you.

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PRICE LINE ONLY. ( No candles or bars) Use the line chart. No bars or candle views. When I talk about a crossing of lines, I am referring to the price line crossing the moving average line. Not the crossing of moving averages themselves. Sometimes, coincidentally, all three lines may cross.

5 MINUTE CHART OR USE 1-4 HOUR CHART The five minute line chart should give you about two day’s view of the action. This simple system is about consistency. It doesn’t really matter what time frame of chart you use as long as you are consistent. Don’t float around. Become familiar with one timeframe and don’t keep changing. The major difference between the two timeframes is the amount of leverage you should use. If you are highly leveraged and you use a four hour time frame, you can’t keep your eye on your account balance. As always I suggest going with minimal leverage if your account can handle 20 to 1 or less. Watching every tick on a highly leveraged trade will drive you crazy and the need to drill down to a smaller time chart can’t be stopped. The less leverage you use, the better. Those who are using hundreds to one leverage can’t afford to use four hour charts unless they have nerves of steel and a huge trading account balance.

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50 SMA (Simple moving average on close price) All charts will have the ability to place a line called a “simple moving average”. Later you may want to fine tune with other settings but for now, use the simple close price line and color it blue. 7 SMA ( Simple moving average on close price) The simple moving average smoothes out the price history line so we can see the average prices during whatever period you select. I like 7 and 5 depending on the time period and market action.

Various currency setups happen several times a day on an assortment of pairs. Not all crossings of the two SMA’s have potential or have the currency strength chart parameters. You must have confirmed strength meter readings to go with this simple entry system of 2 moving averages.

For example: If you see that the CHF and EUR are moving away from each other on the strength chart and they appear to be moving steadily, open the corresponding currency pair chart from your broker and apply the 50 and 7 SMA to it. Maybe is it not about to happen so you pick another pair ans see if the system conditions match the strength chart. Not every currency will work every time. You must look for both conditions to line up before attempting to trade it. This isn’t a race. Take your time and wait.

Just because you happen to be ready to trade doesn’t mean the market will whip something up for you. It usually takes time to see a few potential setups taking place.

Start your session looking for currencies getting stronger and weaker:

Find a few potential strong and weak candidates. Keep your eye on them for an

hour or so. You will begin to feel the various trends developing. Don’t stare at charts. Just keep the strength charts going while you go about your business. When the conditions show themselves you will be ready. Some days the setups are seen more often than others.

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Most mornings I usually see two or three. Evenings here in North America I can

expect at least one good setup. You must get used to observing all the various pairs for this to work. Do not just wait to see if one or two of your favorites will work. You can’t have favorites in this business. It is important you select the correct pair of currencies for the trade. Some time periods result in more profit than others. What moves the Forex market

We are in the world’s most competitive environment. The foreign exchange has the best people in the world trading against us most of the time. I will assume that everybody knows the basic terms in forex, such as pip and currency pairs. If not, you can refer to your broker’s manual to get the mechanics or definitions. The way I trade does not encourage using anything but a line and two simple moving averages combined with the currency meter.

STOPS Many people like to place a stop in case the market goes wild. Take a good hard

look at your broker agreement. As you will see, they do not guarantee stops. They try to get you out.. but there is no assurance other than their claim that they did their best and couldn’t. So, in effect, a stop order isn’t worth beans when you need it the most. Unless you are away from your machine and need something that gives you some illusion of safety, don’t set your stop too close.

The market moves 15-25 pips routinely. Your exit should be the five or seven

SMA crossing into price, so try to guesstimate how many pips from there you need a stop order. I suggest 50-100 pips. Professionals with low leverage routinely set 200 pips on intraday trades.

Instead of relying on a set figure for a stop or close out, we use the 7 or the 5

SMA to tell us the trend is most likely over. Of course, during your trade a bit of economic news may have an effect of the currencies you have in play so In that case, just take the trade off and wait it out. Don’t make this profession more of a gamble than it already is. Learn patience and wait till all the ducks line up before jumping into a trade.

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Chapter 4

Do not play with scared money! This means that you should never trade with food money. If you can’t afford to

lose it, don’t risk it. Either go to a demo or get the heck out of a business you obviously can’t afford to be in. If you have ten thousand dollars or more and you have established credit, use a proper broker you recognize and trust. Until then stay on demo. Those 400 to 1 accounts blow out small accounts in the first couple of trades. Using a reputable broker that has been operating for many years and qualified to carry most of the regulated market instruments, should be your first priority. Trust and reputation will become very important as you begin making money. Your goal must be to accumulate enough money to open a “proper” trading account with a regulated and reputable brokerage.

Two moving averages on a five minute chart will give us potential entry and exit points. I suggest not messing around with the settings at this point. Don’t try to reinvent the wheel. They work fine, so leave them alone. The technical part of the system is fine so leave it up to correctly assessing the currency strength chart.

A five minute line chart should easily display 2 days worth of data. That’s usually enough for day trading. The objective is to trade with your eyes ahead, not backward. What the chart did prior to you opening a trade has no significance. The past is past. We are trading the future. The market will show you a variety of patterns in hindsight, but base your decision on what it is most likely to do in the minutes ahead. It doesn’t matter where it has been or where it may be going tomorrow. Look for the trend.

You need consistency to succeed. I do not recommend you become a robot. We all know those magic systems don’t work. You need to apply common sense and a little sprinkle of intelligence. If you don’t have that, get out now! The smart people will eat you alive!

Predicting the future market direction of one world currency is enough of a task.

Two is even harder to guess. Using this simple system, I suggest you go with the flow instead of fighting it. We only need to know which currency is moving toward or away from a long term trend. It shouldn’t matter which currencies you trade. Only that you see a clear trending direction developing over a variety of time charts.

Messing with one indicator after another brings nothing consistent into your

day. You need habits. Good ones of course. When you can take a look at a chart and say to yourself, “Hmm. I have seen this before. I know what to do.” You will be on your way to making a living in this exciting industry.

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Chapter 5 The heart of the ForexGrail system is you. If it was the system itself, I could automate it and the money would be in leasing

it to banks. A system is only as good as the person or people following it. It is you that makes this work. Watch the currency meter for a few days in your chosen time period. Get used to seeing trends develop.

Forex is speculative trading of derivatives at high leverages. The people most likely to use huge leverage are beginners. Tiny movements are

magnified several hundred times. You can lose a thousand dollars in the blink of an eye trading at 200 to 1. Use a broker that will cut your trade size and leverage down. OandaFX has been doing it for years.

All trading involves risk. You may lose several trades in a row so you need

enough money to ride it out. No system is capable of 10 out of 10 wins consistently. It is you who will make any system work.

Let’s get back to the moving averages; Used on their own, two SMA’s (simple moving averages) on a cross will give you

a certain ratio of winners to losers according to what’s going on in the market. It’s a gamble. The essential ingredient in this system is the currency strength chart . We are watching (with strength confirmation) for the cross of the price line and the SMA.

The ForexGrail system specifies; 50 SMA for finding entry (when the price line crosses). Exit when the 7 or 5

SMA crosses with the price line. The fifty period simple moving averages tell me the trend for my time period

(intraday). It tells me the way the market is trending. Basically, what I want from the fifty line is what the average price has been during fifty, five minute sessions. The trending direction.

Wait until price line has crossed the 50 to enter a position in the same direction

as the trend. If the line is slanted up then a buy is likely. I like to wait for at least 6 pips above or below just to make sure it’s not a fake out.

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Think of the moving average in terms of price, not position. See it in a different light by observing it without the price line at all. Do this on

your charts. Make your chart all black except for the one 50 period moving average. Look at the price. You are seeing the actual market direction without noise. Candles, bars. Indicators, colors, are all noise. Just the ups and downs of trend.

The reason I use 50 and 7 SMA’s are the same reason I look at the five minute charts. I’m used to them. They’re comfortable. They’re familiar. This is very important in working any system. Get comfortable with it. Find some consistency. I have come to depend on the five minute chart as my way of seeing differences.

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Set your pair chart to line mode. All charts allow you to view price as a line instead of a bar or candle. The forex grail system requires lines to show price as a line. The crossing of price against the simple moving average. Not the two moving average lines crossing. By the time the two moving averages cross, the move is over. Those are lagging indicators so I don’t want entry or exits based on crossing of the averages. It has to cross with price. With the currency meter confirming an entry, we get a jump on the other traders waiting for the cross between the two moving averages. Ha.Ha. You’ll see what I mean now that I mentioned it. I don’t use bars or candles. I am only interested in the averages of price. Learn to see the market in terms of averages. The only way to do that properly is by viewing a line chart. It filters noise and price peaks you wouldn’t have gotten filled at anyway. It displays at a glance the true average direction a currency is going. This picture was taken about 20 minutes after the signal to enter was given by the 50. The price line is white.

Although this system is easy to follow, there are going to be lots of demons like emotion and lack of patience. You must be strong. Make the determination now, that you will follow the ForexGrail trading system with the numbers I give you before trying to make changes. Do not make this out to be any harder than it is.

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It doesn’t matter what charts you use. They are all pretty well the same. Five minute price line with two moving averages on close.

Don’t use bars or candles for this system. They will shake you out of a trade too early and cause you to make decisions on emotional triggers. When applying the ForexGrail system, use the price line. Just use a simple line and get used to seeing it. Keeping you focused on the line and its impartially (pointing down or pointing up) will let you make better trading decisions.

Enter 6 pips after the crossing of the 50 line and price. This makes sure it’s not

just noise. It can still go down a bit once you enter. The 50 is showing direction and the 7 will be marking an exit for you once things get going. The picture below shows my entry after meter confirmations on the morning I am writing this.

I have often said that the candle was a conspiracy to keep beginners from seeing

true market action. They sometimes turn green too early and red too late. Almost like someone is programming them..hmmm. These fancy things just clutter up what I am seeing. (I know it will be like weaning a heroin addict to get you to toss them, but you must not use candles or bars for this system to work properly.) Keep this as simple as possible in the beginning. Make yourself stick to the rules. Get used to making trades with your platform in demo. Absolutely, positively, do not start using real money until you have proven to yourself that the system works and you have clearly assessed and discussed the risks involved. Once you get a live trading account fills may not be as good so if you can’t make money with a demo, then you will not make money with a live account either.

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Chapter 6 Basics first. We are trading the difference in price between currencies. Charts extract the

difference in price between two separate and quite distinct currencies and then display the result.

The line going up on any forex chart means a rising price for the currency that has first position in the pair. EURUSD has the line going up to indicate a higher price for the euro dollar.

Understanding that we are buying strength or selling weakness of individual currencies, not pairs, is vital to foreign exchange traders. Come on. Pro’s talk about individual currencies since they understand each is an entity of its own. There are countries and economics behind each one. Drill it into your head to think in terms of individual currencies.

The meter is perfect for reinforcing the idea that each currency has unique

characteristics depending on factors at home and abroad. Strength and weakness is directly tied to price. Price should reflect absolute strength or weakness.

The US dollar is gaining strength. This means the line on the EURUSD chart is going down. The EURO is gaining strength This means the line is going up on the EURUSD chart.

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But… there is a crucial element involved in the ForexGrail trading system. In the

first statement where I said the US dollar is gaining strength when the line goes down, I could have said that the Euro is losing strength. Both are correct. For all I know by watching one chart, the US could be weak or it could be strong…or the Euro is weaker. I don’t even know if either currency is doing anything at all without looking at other currencies that may be going strong and weak while pulling this pair along.

When you give currency trading some deep thought, you have to admit that in essence, the entire market symbolizes strength and weakness. The ForexGrail system understands what makes currencies work. Ask any banker. The currency market trends. Trending among currencies is a characteristic acknowledged by all foreign exchange experts. All currencies trend at different times.

BE CONTENT WITH TAKING A SMALL BITE OF AN EXCELLENT TREND. If you are using a small account with a derivatives only broker, this is your survival tip of the day: “You must enter the market with a steady trend that the market maker must eventually follow.”

Make your entry following the trend of the “real” currency market, the same one the broker must follow or lose clients. The idea behind the ForexGrail system is to get in the habit of making a trade with the trend, not the wave within the trend. The true trend.

If you follow the rules correctly, there will be times the market seems to be going against you when in fact, it didn’t. You got caught on part of a wave. Do not pick a volatile time to enter. PLATFORM PRICES OFTEN VARY WITH THE CHART. Do not make the mistake of confusing your chart price with what your broker has posted in the window of the platform. Charts and platform prices often differ. Make sure to look at the prices on your trading platform before making a market order trade.

It would be a ring toss trading with just two simple averages. More is needed. Let’s dissect what the moving averages tell us before going on. The two moving averages tell us where to enter and where to exit trades based on a simple idea. The tool I am talking about is the currency strength chart. It tells you what all the other currencies are doing in relation to others. Remember, you can get fancy later, just follow the simple system first.

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The ForexGrail system uses the currency meter to identify potential

candidates for each side of a trade. It will alert you to the pairs you should be looking at in more detail. You can alternatively look at all the pair charts if you have multiple monitors. The currency chart sorts out the strong from the weak.

The system will require you to watch the trends as they develop for at

least an hour after the European, Asia, or new York openings to make sure of a direction to hop onto. It is precisely the tool you need in order to determine when the time is right for making a trade. The ForexGrail system, takes the work out of looking at more than two dozen charts to see which currencies are weak and strong. You will need to bring up the individual charts for your currency pair choice and fine tune things.

You may find some things repeated. This is a very simple system but several things need to be said several times to show importance.

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Let’s begin a typical trade session.

Remember I told you about the ring toss using just two simple moving averages on their own? They can’t do much more than tell us during any particular moment in time, when a trend seems to be developing among the common forex pairs. They are very good at letting us see where the trends are.. once we are able to choose which pairs to keep our eyes on. Here is how I find the best currencies to trade;

You must take all emotion out of your selection of a currency. Our objective as forex traders is to extract the maximum profit from a deviation between two currencies. We trade the spread. It shouldn’t matter what currency you use to make money. Sticking with a particular pair or choosing one currency over another based on familiarity is dangerous. Keep your emotional attachment to a particular currency for shopping. Let’s get on to finding a pair to trade. Wanting to know how your chosen currencies are doing in their interaction with other currency pairs prior to opening a trade is just plain common sense isn’t it? In the ForexGrail system, you must trade the currencies that are moving away, or apart from each other at the fast rate. This means your first objective is to find one currency that is trending towards strength, and match it with a currency that is trending towards weakness. Makes sense eh? We make our money on spread. The difference in price between currencies.

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Pick a currency that seems to be gaining or losing momentum at a faster rate than the others for the time period in which you are trading. If it is early in the euro session, you will most like see the EURO and GBP moving a little faster than the others. New York trading session will usually move the US dollar around faster than the others. If you are trading any of the time periods; (Europe, Asia or New York) Watch which ones are most active and consistent for an hour after the opening. You can do this by looking at a wide range of charts if you happen to have several monitors or want to take the time to calculate how each of the currencies involved interact with your selections. Take a look at this picture. It shows the heart of the ForexGrail system. It is just a simple tool, but it pulls everything together. It takes the work out of watching multiple screens to find strength and weakness.

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The currency strength chart is simple in operation. It looks at all pairs and uses various weighting calculations to find out how, relative to the others, a particular currency is doing. It measures individual currency strengths by making comparisons with how that currency interacts with others. Strength or weakness is not clear using one chart. In order for you to figure out if the currency is strong, you have to open other charts and see if it shows strength against other currencies. The currency strength chart tells you at a glance which currencies are moving and which charts you should open to take a look. The chart allows us to narrow down a pair of currencies to trade.

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I need a lot of charts to keep my eyes on so I settle with observing one or two that contain a strengthening currency and a weakening one. Many brokers have various pairs available to trade In this limited example I will select the CADJPY from my pair selection with Oanda. CADJPY

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Let’s apply a 50 and 7 SMA to this chart of the CADJPY and see what’s happening.

This will be my first chart open after seeing the numbers on the strength chart. Before I do anything, I will want to have a look at the CADJPY to determine if it is a candidate for my pair. First glance tells me the trend is definitely in place but the trigger happened a few hours ago.

It’s obvious that the Yen has been strengthening against the weaker Canadian dollar for several hours. In the picture last page, the blue line is my 7 and the pink is 50 sma. I am using the Oanda chart. It doesn’t look like the fifty and 7 will be close to each other for some time so I will look at my next candidate since this potential trade could be exhausted. I am looking for a small piece of momentum in spread just after it starts and before its exhausted.

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Do not jump every time you see red and blue. These should alert you to a developing trend only. They could change. You must watch what the currencies are doing for a time to get a fix on their true strength or weakness. You are looking at the meter to provide you with some clues and save time watching all the pairs. How will you know if the strength is developing or the weakness is real? Aha. Look at the 7 and 50 moving average as guides. I like the one hour view of the 50 SMA to be sure of the long term trend. Going back to the 5 minute view and the general trend on other currencies, I can time my entry on the upward or downward, crossing of the 50SMA.

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I am simplifying this example because it doesn’t show the meter which would be indicating this pair as my best choice and I would have spent some time observing and checking into any upcoming economic reports affecting the trade I may be in.

I am not looking to get in as soon as the trend becomes directional. You will find that many times it isn’t possible or preferable to get in on the first part of a trend. Waiting and biting your nails if necessary, until the exact moment and taking a little bite of the apple is the way to consistently make profits. Give your trade some time to work. Don’t set ten pip stops with the broker. My hard stops would be more than most people are comfortable with (50-100) but make yours at least three times the amount you are going to use for a mental stop. Keep stops above 20 with your demo until you get a feel for where to place them. It takes a bit of ups and down for the trade to work. Take a safe piece of the move. 10 pip trades will kill you in fees. They are too small. A broker makes money on filling orders. Either way. A stop is an order. You already lost the spread getting into the trade, getting out means you only need the market to move a couple of pips and you are out. Keep the stops high on your demo so they can show you what’s best for you when going live.

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I am always looking for the beginning of a trend. I am always watching for the ones that have already begun for the morning or session. Sometimes the lights turning red and blue on the meter during the beginning of my trading day may be showing peaks and not trends. I want to see steadily rising numbers for my strong choice. High numbers are not what I want to see. I want to see a climbing number or declining number. Just picking the highest number isn’t the idea. You want to watch the trends developing and moving towards weakness or strength, You are trading the spread between currencies. This means you want to see as great a difference between two currencies as possible at an increasing rate of change. That’s the profit. Don’t get attached to one special pair. Sure, if the signals are there fine, but look around. Experiment with how many pips you can get with other pairs and how much that translates to in your home currency.

. The fifty shows direction of trade (long or short) and seven when to exit. (On the basis of your determination of best currencies according to the meter) I’m saying that because you can’t just pick any favorite for this to work correctly. Once you have identified the potential candidates for your trade, you need to get into the market as soon as possible or your increasing spread between the currencies begins to slow down.

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Your personal risk factor is the only thing that will determine how much money you make. The ForexGrail system can be used in any time period and under most market conditions..Even economic reports. It is you who will have to see the trend beginning and take advantage of it by selecting a good counter currency. It’s not hard to do using a few simple instructions.

To summarize; You need the currency chart in combination with the two SMA’s. On the next page, let’s finish this trade. The 7 is being hit and it is time to exit.

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Chapter 7 Anchors Now I want to add one more concept to this simple moving average system of entry and exit. Anchors are places where prices, on a five minute chart, have a tendency to dawdle. This concept was developed several years ago when a friend and I would make guesses on where the price was most likely to rest, before moving on. This discovery took a few years to refine but I found that using the OandaFX 5 minute close price chart, I could clearly see the places where price seemed to be magnetically attracted by using a horizontal line.

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Below is an example of what happened a little later on that morning.

As you can see, there are certain ranges where the price seems to hang around. I have them marked as “anchor bands”. I do not try to predict anything more than a likely place where price will most likely be drawn to. Anchors are a fuzzy concept and very difficult to explain without showing you in real time how they work. I will use pictures of the CADJPY I took this morning. As the image below shows, I begin by counting the amount of times the price seems to hit an area. I have circled the spots below where activity that morning is shown to center. I only want some kind of indication of where price will most likely go based on previous behavior that morning. I am not trying to go back more than a few hours.

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By bringing a horizontal line across, I set the lines where I think the most activity has taken place. I call them Anchor bands and they are not support, nor resistance. Just places where the price has shown it is most likely to go..then rest. It may go up and it may not. I don’t know for sure what is going to happen once it hits an anchor, but I do know with a certain amount of confidence that when price is within one of these anchors spots, it is most likely going to reach that area. As you can see from the pictures, the price is almost drawn to the anchor band like a magnet. These little jumps can add several pips to a trade in progress and the anchors will let me hang in a little since I know the price is most likely to go to the band. What it does after it hits the band, I don’t know. I just know its most likely to get there. Anchors allow me to see a good place to get out of a trade. Using the ForexGrail 50/7 SMA along with the currency meter, shows me where to get into and out of a trade, but using anchor spots let me wring a few extra pips out of each trade.

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Risk I consider what I do the equivalent of driving a car. Sure, there is risk. But I am in complete control of the decisions I make concerning my trading money just as I am in choosing where and how to drive safely. Watching charts and trading forex is not my lifestyle. I use it to provide me with a lifestyle. I pick a time when the market is most likely to make a move, and I do some planning ahead of time to get a little piece of it. The mechanics of making trades is something you will have to wade through on your own using your brokers’ manual. Each platform is different but they all follow the same routines. I usually make market orders with a huge stop limit and possible take profit targets. A stop is just an order. Keep that in mind.

We are trading currencies folks. We try to extract the difference between separate and quite distinct currencies. Spread trading the forex market is something people tend to keep quiet about since their methods and techniques usually involve some indicator carried over from the other markets where there was no spread against another quite different entity.

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Standard charts go up and down; up means good and down means bad. In forex, we can

trade both up and down.

Currency is not determined by emotions the way much smaller markets like stocks and

indices. Most commodities are ruled by the speculators’ desires and fears. Not foreign

exchange.

Central banks and professionals determine the price relationship of a currency. What we

see on our forex platforms is a contrived market. There is no single central authority for

foreign exchange prices. Professionals and specialists determine the value of a country’s

currency. We have nothing to do with it. We can only hope to find an opportunity or an

edge by understanding how these folks determine a currency value, which is translated

into a price. We only have to find an opportunity.

Understanding that we buy strength or sell weakness of an individual currency,

not pair, is vital if you hope to become successful and last trading this type of market.

One more repeat….

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Test the ForexGrail on a demo until you have satisfied yourself it works. Always keep leverage low and give each trade time to work for you. Do not bail out too fast. All good trades move up and down. This is normal. Expect to stay in the market a while depending on the time of day.

Notes: Don’t just jump in right away. Watch for the steady progression of the numbers

on the meter. They will change all the time but still show you strength and weakness. Be careful of upcoming economic announcements. Most economic reports will not move the market out of its prevailing trend unless there is a very big surprise. Years ago, the market would spike frequently on these reports but they rarely do now. The big ones to look out for and you are advised to take your profit and wait them out are reports like Nonfarm payrolls. Big reports can still shake things up.

I wish you the very best life has to offer. Tom Yeomans tom@tradetime.ca

The simple, yet powerful meaning behind this easy to follow system is the use of two simple indicators along with a powerful tool to make you win consistently. Of course, not all your trades will be perfect. However, using the ForexGrail system of entry and

exit along with a little common sense, will result in a much higher percentage of winners than you have been experiencing. Everyone should follow good money management principles and never risk more than you can afford to lose. Start with a low leverage

trading account and gradually increase the size of your trades.

Common Questions FAQ

How much can you make with ForexGrail?

That's a common question. You can make as much as the market will give you under the circumstances of the day. Any professional will tell you that the market will give what it gives as often as it feels like. Everyone is different. All trades are usually unique. If they weren't we would know we were going to win or lose would we? It’s our unique collection of skills that will determine what you will make trading.

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Some people begin with a little money and others have a lot. You have to get the silly notion of making huge amounts of money in Forex when starting out. It’s not going to happen. The very small amount of people I know who methodically took the time to develop a good system and ran it several months proving a profit each time ended up staying in the game for years with me. They found a system, applied good money management, and didn't jump the gun whenever the market moved a bit.

If you follow a demo system for a few months with good results, you should be able to carry it out live with approximately the same win/loss ratio. Take your time. This is a tough business that can pay off well. If you don't run before you learn to walk. Take conservative trades and never play with scared money.

How often do the setups work?

I can usually see at least two setups a morning. I have often seen a few more at different times of the day on various currencies. I have no way of knowing what's going to be happening. All i can say is that when the correct conditions make themselves apparent, I will be waiting, This is a waiting game folks. You wait for the right conditions or you don't make a trade. Stick to that, and you'll be fine.

The idea here is to adopt a system and stick to it. Sit down and write out your rules for entry and exit. You do it for yourself. You will find that just about any tried and true system will work if people only stuck to it and had an edge.

The ForexGrail is a good system. It becomes an excellent system with the currency strength chart added to it. If you can't make it work on paper, you don't stand much of a chance with real money. If you don't have discipline, nothing, even the ForexGrail won’t work for you.

Copyright 2010 Tradetime Products.

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TERMS OF USE THIS MATERIAL MAY NOT BE COPIED AND DISTRIBUTED WITHOUT THE EXPRESS WRITTEN PERMISSION OF ITS PUBLISHER. Copyright © 2010, Tradetime Products. All Rights Reserved. No part of this e-book may be reproduced in any form or by any means electronic or mechanical, including photocopying, recording or by any storage and retrieval system, without express written permission from its publisher. The ForexGrail™ System may not be gifted or resold to anyone, under any circumstances. Only direct customers of TradeTime are allowed to view or be in possession of this material. If you have purchased The ForexGrail™ System from anyone other than TradeTime, or someone officially authorized by them as a vendor, the seller is in violation of terms that they have agreed to and you are in possession of an unauthorized, illegal copy. If you believe that you have obtained an unauthorized, illegal copy, or know of someone who has, please contact: tom@tradetime.ca

RISK DISCLOSURE STATEMENT/DISCLAIMER AGREEMENT The information contained on our website and The ForexGrail™ Trading System e-book is compiled for the convenience of the site’s visitors and customers of TradeTime, and is furnished without responsibility for its accuracy. Trading any financial market involves risk. We at TradeTime are not financial analysts or advisors. Before using any of the information in this e-book we recommend you seek independent professional legal, tax and investment advice as to whether the information provided is suitable for your particular circumstances. Failure to seek professional personal advice prior to acting on this information could lead to you acting contrary to your best interests and could lead to the loss of your capital. The information provided is meant to be a guide only and it must be tempered with the investment experience and independent decision making processes of the individual reader. Only risk capital should be used. By visiting the TradeTime website and/or downloading the e-book you agree to hold harmless TradeTime and its agents for any loss, financial or otherwise resulting directly or indirectly from this website and/or e-book, its data, content or lack thereof, materials associated web pages whether accurate and timely or not. This e-book and TradeTime’s website and its contents are neither a solicitation for an offer to Buy/Sell any financial market. The contents of this e-book and the website are for general information purposes only.

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Although every attempt has been made to assure accuracy, we do not give any express or implied warranty as to its accuracy. We do not accept any liability for error or omission. Examples are provided for illustrative purposes only and should not be construed as investment advice or strategy. If hypothetical or simulated performance results are used, these have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have been under-or over-compensated for impact. No representation is being made that any account will or is likely to achieve the profits or losses similar to any examples shown. Past performance is not indicative of future results. By visiting this website and/or purchasing this e-book you will be deemed to have accepted these terms in full. TradeTime and its representatives do not and can not give investment advice or invite customers to engage in investments through this e-book. The information provided in this e-book is not intended for distribution to, or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject us to any registration requirement within such jurisdiction or country. Hypothetical performance results have many inherent limitations, some of which are mentioned below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with benefit of hindsight. In addition, hypothetical trading does not involve financial risk and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example the ability to withstand losses or adhere to a particular trading program in spite of the trading losses are material points, which can also adversely affect trading results. There are numerous other factors related to the market in general or to the implementation of any specific trading program, which cannot be fully accounted for in the preparation of hypothetical performance results. All of which can adversely affect actual trading results. http://accustrength.com

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